If you`re considering doing business between Vietnam and Singapore, it`s important to understand the double tax agreement (DTA) that exists between the two countries. The DTA is a treaty that aims to prevent double taxation of income earned in one country by a resident of the other.
The DTA between Vietnam and Singapore was first signed in 1994 and has since been revised several times. The latest version came into effect on January 1, 2017, and has important implications for businesses operating between the two countries.
Under the DTA, income derived from business activities in one country by a resident of the other country will only be taxed in the country of residence. This means that if a Singaporean company has business activities in Vietnam, the income earned will only be taxed in Singapore.
The DTA also includes provisions on dividend, interest, and royalty income. Dividends paid by a company resident in one country to a resident of the other country will be taxed at a maximum rate of 10%. Interest and royalties paid between the two countries will also be subject to a maximum tax rate of 10%.
In addition, the DTA provides for a mechanism to resolve disputes between the tax authorities of both countries. This helps to ensure that businesses are not subject to double taxation and can provide greater certainty for investors.
Overall, the DTA between Vietnam and Singapore provides important benefits for businesses operating between the two countries. By preventing double taxation and providing for a mechanism to resolve disputes, the DTA can help to provide greater certainty for investors and facilitate the growth of trade and investment between the two countries.